Germany’s ‘China City’ Doesn’t Want You to Call It That Anymore

The Washington Post / Loveday Morris, Kate Brady, Emily Rauhala

12:34 JST, May 23, 2023

DUISBURG, Germany – Trains laden with containers of clothes and solar panels straight from China still trundle into the station here about five times a day, but other plans to forge links between this German rust-belt city and Beijing have ground to a halt.

Duisburg’s aspirations of using Chinese tech giant Huawei to modernize its administration, schools and traffic systems are on ice. Construction of a Chinese business hub on the Rhine River has been abandoned, and embarrassment hangs in the air.

Local officials who not long ago touted Duisburg as Germany’s “China City” say that’s not a tagline they want to use anymore. “Public opinion has changed, political opinion has changed,” said Markus Teuber, the China commissioner for Duisburg, the sole German city to have such a post.

The shift in this western German city of 500,000 mirrors a broader rethink in Europe on relations with Beijing. Trade continues to flow – China remains the 27-nation European Union’s top trading partner. Yet the E.U. has inched closer to Washington’s skeptical view of Beijing, a trend the United States expects to continue despite a Chinese “charm offensive,” according to U.S. military documents leaked on the group-chat platform Discord.

Hopes that China would help boost Europe’s economies have been clouded by concerns about competition, influence and exposure. Beijing’s authoritarian turn under President Xi Jinping, its belligerence toward self-ruled Taiwan and its failure to condemn Russia’s invasion of Ukraine have all raised alarms. European policymakers are wary after seeing how dependence on Russian energy limited their leverage when President Vladimir Putin’s tanks rolled toward Kyiv.

“We are no longer this naive continent that thinks, ‘Wow, the wonderful China market, look at these opportunities!'” said Philippe Le Corre, a French analyst with the Asia Society Policy Institute. “I think everyone has got it.”

Many European leaders agree on the need for “smart de-risking,” as Chancellor German Chancellor Olaf Scholz put it in a speech in Strasbourg this month. But Europe remains divided on what that should involve. The splits are apparent in the rhetoric of different European leaders – and in the ongoing negotiation of a new strategic policy from Germany, which as the E.U.’s largest economy accounts for half of the bloc’s 223 billion euros (about $240 billion) in annual exports to China.

Germany’s economy minister first mentioned in September that a new policy was in the works. A draft written by the German Foreign Ministry in early November and seen by The Washington Post provides insight into some of the guardrails under debate, but officials say internal wrangling is still underway.

Coalition partners are broadly in line but “nitty-gritty details” need to be worked out, according to one German official, speaking on the condition of anonymity to discuss internal government policy. He pushed back on the idea of a delay, yet acknowledged that it would be “optimistic” to expect the strategy before the end of the year.

As European policymakers have been hashing out their positions, China has embarked on a new effort to shape perceptions, advance defense objectives and counter U.S. influence, according to two U.S. Joint Chiefs of Staff briefing documents leaked on the group-chat platform Discord.

“Beijing is supplementing its ‘wolf warrior’ diplomacy” – assertive, bombastic – “with a more measured approach,” one undated briefing document described, citing public statements by Chinese officials in early March.

The effort “privately aims to divide the U.S. from Europe by taking advantage of the E.U.’s economic challenges stemming from the pandemic and the Russia-Ukraine conflict,” according to a second document, which included an assessment by the Joint Chiefs’ intelligence arm, known as J2.

China’s push has been largely failing, the undated assessment determined, based on March conversations with European diplomats.

“Beijing likely does not fully recognize the extent to which European partners are wary of the PRC’s intentions, and believes its changing rhetoric is sufficient to frustrate transatlantic ties,” it concluded, using the acronym for the People’s Republic of China. “European officials likely will aim to secure their economic interests while increasingly aligning with U.S. views on the PRC.”

Indeed, the Italian government this month indicated that it intends to pull out of China’s Belt and Road global infrastructure initiative, while European Commission President Ursula von der Leyen is pushing for export controls on sensitive technologies.

But wariness levels are uneven across Europe. Hungary’s populist government has been deepening connections, with Foreign Minister Peter Szijjarto inking a new deal with Huawei during a visit to Beijing last week.

And the leaked U.S. briefing documents appear to have been written before French President Macron was feted with a state visit to Beijing, touted China’s potential as a peacemaker and warned Europe that it risked becoming a “vassal” to the United States and getting “caught up in crises that are not ours.”

No country is as pivotal as Germany for Europe’s relationship with China. In addition to being responsible for such a significant portion of E.U. exports to Beijing, Germany accounts for the majority of E.U. investments in China, with some 5,200 German companies engaged in manufacturing there, employing 1.1 million people.

Late last year, Scholz rankled allies when he became the first Group of Seven leader to visit China after the pandemic, taking along a business delegation.

On a map accompanying the leaked U.S. documents, almost all of Europe was marked as having “minimal receptivity” to China’s overtures, except Germany and Serbia, which were assessed to have “moderate receptivity.”

German government spokesman Steffen Hebestreit declined to comment on the document. “Generally, Germany regards China as a Competitior, Rival and a Partner and sees itself closely aligned with its European and transatlantic partners,” he wrote in an email.

The uncertain position of Europe’s largest economy is what makes it “so relevant and interesting to China,” said Tim Rühlig, a senior research fellow at the European Council on Foreign Relations. “Germany is quite important on this balance on where the E.U. ends up.”

Scholz has repeatedly stressed that Berlin is seeking to “de-risk” rather than “decouple” from Beijing.

German officials want to strengthen regulation of foreign investments in critical infrastructure. The Interior Ministry is investigating the risk of existing Chinese components in Germany’s 5G network and the implications of Germany’s rail network, the Deutsche Bahn, having signed a contract with Huawei for the backbone of its signaling-and-control network.

The Economics Ministry, meanwhile, has suggested “stress tests” that would anticipate vulnerabilities if sanctions against China were imposed, according to an internal ministry document viewed by The Post.

When it comes to overall strategy, Germany’s new China policy “will explain what de-risking means in actual terms concerning trade and technology science, culture and also on different levels of government within Germany,” said Nils Schmid, parliamentary foreign policy spokesman for Scholz’s Social Democrats.

The draft viewed by The Post indicates that German officials are considering controls on outbound investments, “with a view to avoiding unwanted technology transfer, especially in the case of sensitive dual-use technologies and technologies that can be used for surveillance and repression.”

The draft, first reported in November by Der Spiegel, takes a harder line than Germany sometimes has in the past, calling out the Chinese leadership for being willing to use their market as leverage, admonishing Beijing for human rights violations and referencing the need for companies doing work in China to be “respecting environmental standards and labor rights and ensuring no forced labor in the supply chain.”

Just how much of the early draft will end up as policy remains unclear, with the Foreign Ministry, headed by Germany’s Green Party, more strident on China than Scholz’s chancellery. “It’s a very preliminary draft,” the German official said.

A broader national security strategy, which will include a chapter on China, will be released in the coming weeks, with a more detailed China strategy to follow, the official said.

For Duisburg – a city with high unemployment, and a skyline dotted with the hulking vestiges of its former place at the heart of German industry – the draw of Beijing had been strong. Local German officials pitched the potential of their inland port, the largest in the world, and pinned their hopes of an economic turnaround on China.

Xi visited in 2014 to meet a newly arrived train from Chongqing. Soon, about 80 percent of trains from China to Europe were stopping in Duisburg. Local officials liked to point out that Chinese maps labeled Duisburg more prominently than Berlin or Paris.

Even as other countries were blocking Huawei from critical infrastructure, Duisburg was going all in. It signed a 2018 memorandum for the tech giant to build infrastructure for government service portals and a “smart city nervous system.”

But that era is now over.

Last year, officials said the Huawei partnership had not been renewed, and the copy of the memorandum was deleted from the city’s website. Visits to Duisburg by Chinese business delegations, which used to happen every week, have slowed to a trickle.

An effort by “alleged Chinese diplomats” to reach out to local security officials earlier this year was flagged as a concern, according to one official, who spoke on the condition of anonymity because of the sensitivity of the topic. “Since there were fears of spying attempts, no meeting took place in the end,” the official said.

And Chinese shipping giant Cosco – which has been the subject of controversy with its recent purchase of a stake in the German port of Hamburg – quietly sold its 30 percent share in the Duisburg Gateway Terminal in October.

Markus Bangen, the chief executive of the Duisburg port, said contractual terms prevented him from commenting on the specifics, but he implied that Cosco was asked to leave. “There are rules in our contracts, and you have to follow these rules,” he said. “If you don’t do so, it’s like in soccer, there’s a yellow card. Sometimes the second yellow card, but then follows the red card: You’re kicked out.”

Duisburg officials are now keen to downplay links to Beijing.

Johannes Pflug, head of the China Business Network Duisburg and formerly the city’s China commissioner, said the trains from China – which had been trumpeted in numerous press releases – are only a small fraction of the port’s business.

“The city of Duisburg had not that much good news in the past years, that they made the mistake to stress too much a positive thing,” he said. “For the port of Duisburg, I can confirm, yeah, we made a mistake.”

Now the city is more clear-eyed, he said.